Permanent Tsb Group Holdings Plc · EURONEXT:PTSB
Permanent Tsb — FY2023 Earnings Presentation
42 slides from Permanent Tsb's earnings presentation, Mar 7, 2024
Slide 1: Annual Results 2023
Annua Result l 202 s 3th 7 March, 2024
Slide 2: Annual Results 2023
Annual Results 2023 ptsb gy Py, Eamonn Crowley, Nicola O’Brien, CEO CFO
Slide 3: Contents
Contents 1 2 3 4 Business Financial FY’24 & Medium Appendix Update Performance Term Outlook
Slide 4: Customers and Financial Performance
• Ulster Bank migration complete; providing gross interest income1 of c. €170m in FY’23 Net Loans • New Mortgage Market Share2 of 19.2%, +70bps YoY Customers +10% from • Growth of Business Banking Book to >€1bn Dec’22 • New brand launched Oct’23; over 20 years since last investment in brand Net • Un
Slide 5: Macroeconomic and Mortgage Market Overview
GDP and MDD Growth (%) CPI (Inflation %) Labour Market (%) Unemployment Rate Employment Growth MDD GDP CPI 8.2% 5.5% 4.9% 9.5% 4.4% 4.5% 4.6% 3.4% 3.0% 2.8% 9.4% 2.5% 3.0% 0.5% 2.0% 1.6% 1.8% 1.9% 2022 2023 2024e 2025e 2022 2023 2024e 2025e 2022 2023 2024e 2025e -3.2% ECB MRO & Deposit Rates 1 (%) M
Slide 6: Mortgage Drawdowns and Market Share
Total Customer New Lending (€bn) 1 Mortgage Drawdowns (€bn) & Market Share 2 (%) €2.1bn €2.8bn €2.8bn €10.5bn €14.1bn €12.1bn Mortgage Market 18.5% 19.2% 0.1 0.2 • CAGR of 11% • CAGR of 8% 0.1 17.8% 0.1 0.1 since 2021 since 2021 0.2 0.1 • Total Lending • Green 2.6 inclusive of 2.6 Mortgages 2.3 2.3
Slide 7: A Customer and Purpose Led Strategy
A Customer and Purpose Led Strategy Delivering Our Next Phase of Growth Transforming the Bank, Differentiating on Customer Experience, Driving Sustainable Profits & Shareholder Returns Purpose Ambition Brand Promise Working together to To be Ireland’s best Personal and Altogether More Human Build Tr
Slide 8: Major overhaul of brand and business repositioning
• Major overhaul of brand and business repositioning • Reflective of the larger scale and business diversification of the Bank, our customer focus and growing ambitions • Launched new brand name, PTSB, visual identity, and customer promise • At PTSB, we are ‘Altogether more human’. We bring the best
Slide 9: Growing customer base and brand engagement
Contactless Digital Customer Awards NPS2 Active Digital Brand Power 1 Payments Activity 3 Customers 4 • Grand Prix Award 76m 637k • Innovative 13% +20 Pts 119m Banking Product • Best Customer Success Story Growing Customer Base Strategic Partnerships (FY’23) • Best Customer Service Team +10% 1.3m c.
Slide 10: Support Ireland's Transition to a Low Carbon Economy
Support Ireland’s Transition to a Elevate our Social Impact & Grow Sustainable Profitability Low Carbon Economy Enhance our Culture Environment Social Governance & Disclosures • c. €700m Green Mortgage • Title Sponsor of the Irish • Board approved Sustainability Lending (+40% YoY); B3 Energy Olympic
Slide 11: Contents
Contents 1 2 3 4 Business Financial FY’24 & Medium Appendix Update Performance Term Outlook
Slide 12: Income Statement
Grow Diversified Efficient Capital And Income Streams Organisation Resource Allocation Income Statement (€m) FY’23 FY’22 YoY YoY €m €m €m % Net Interest • Supported by completion of Ulster Bank migration Income and interest rate environment Net Interest Income 620 362 258 71% Non Interest Income 48
Slide 13: Net Interest Income and Net Fees & Commissions
Net Interest Income (€m) Net Fees & Commissions (€m) 2.91% Total 2.32% Asset Yield 1.71% NIM% 1.54% 101 68 (84) (33) +20% 125 42 42 81 620 362 35 FY'22 ECB Linked Acquired Other L&A Treasury Funding Deposits FY'23 L&A Loans Assets Costs FY'21 FY'22 FY'23 • +20% since FY’21, post opening of c. 120,00
Slide 14: Total Gross Performing Loans
Total Gross Performing Loans (€bn) Business +50% Banking 20.9 Consumer +10% Finance 19.1 0.3 Mortgage 0.5 1.0 0.9 0.2 0.3 0.2 13.9 5.0 0.3 0.2 19.6 0.3 0.2 18.5 13.4 FY'21 Organic Growth Ulster Bank Mortgage FY'22 Organic Growth Ulster Bank Mortgage Ulster Bank SME PTSB Asset Finance FY'23 Acquisiti
Slide 15: Performing Homeloan Book by Product and Yield
Performing Homeloan Book by Product (Mix %) Homeloan Yield (%) +57% 4.50% Total Book €bn 19.2 3.73% 18.0 2.92% 2.69% 3.69% 12.2 2.52% 2.56% 17% 11% 13% 2.50% 19% 14% 35% 0.00% 70% 73% FY'21 FY'22 FY'23 48% Stock Flow ECB MRO Rate FY’21 FY’22 FY’23 Fixed Rate Maturity Profile Fixed Tracker Variable €
Slide 16: Business Banking, Asset Finance and SME Books
Business Banking Book Movement 1 (€bn) Asset Finance Lending New Lending 0.5 Asset Supporting c. €220m in Finance Book c. 18,000 >1.0 2023 0.2 of €0.5bn at customers (+16% since 0.3 0.5 Dec’23 nationwide FY’21) FY'22 Acquisition & HY'23 Asset Finance FY'23 Organic Growth Migration & Organic Growth S
Slide 17: Operating Expenses and Cost Income Ratio
84% CIR%2 66% c. 60% • Larger Scale of Business Balance Sheet c. €28bn FY’23 €m +25% +36% since FY’19 3 • Lower level of investment spend for 10 year 10 10 15 12 period to 2018 50 • Investment level increased from 2019 across 495 People, Customer, Digital & Technology, Branches, Brand & Sponsors
Slide 18: Impairment and Provision Coverage
Cost of -13 bps -1bp Impairment Release/(Charge) (€m) Risk 1 Provision Stock (€m) Expected Credit Loss FY’23 FY‘22 FY’21 521 570 Model (Charge) / Release (29) 14 (59) 135 Post Model Adjustments 21 10 54 -3 Other P&L Items 10 7 6 52 P&L Impairment (Charge) / Release 2 31 1 137 Capital Deduction for N
Slide 19: Funding Composition, Deposits and Liquidity
Total Funding Composition FY‘23 (€bn /% share) Total Customer Deposits (€bn) Sub Debt 22bps2 19bps 86bps Yield % 0.3 / 1% Retail Deposits 23.0 • 20% growth Repurchase 12.4 / 49% • 91% Funded by 21.7 since FY21 Agreements Customer 19.1 0.4 / 2% Deposits • 77% Non 25.2 3.9 5.2 4.3 Interest Senior MTNs
Slide 20: CET1 Ratio, Capital and RWA Movement
CET1 Fully Loaded Ratio Movement (%) • Fully Loaded CET1 ratio 14.0% at FY’23; 120bps lower than FY’22 • Main drivers are: • RWAs on Migration of remaining Ulster Bank assets (c. -100bps) +1.5% • Day 1 ECL on acquired Ulster Bank Assets (c. -50bps) -1.0% -0.4% -0.5% • Net growth in Underlying Loan B
Slide 21: Risk Weight Densities
Risk Weight Densities EAD RWA Avg. Risk FY’23 (€bn) (€bn) Weight % • PTSB models were built (in 2017) when non-performing loans were at a peak level. The profile of the PTSB portfolio has substantially improved following Residential Mortgages 20.2 8.2 40.4% deleveraging and both organic and in-organ
Slide 22: FY'23 Actuals versus Guidance
FY’23 FY’23 Actuals Guidance 19.2% New mortgage business market share of 19.2%, +70 bps YoY 18-20% €1bn Total Business Banking Book growing in line with expectations €1bn €668m Strong Total Income performance, impacted in H2’23 by a lower Deposit market c. €680m 66% Cost Income Ratio1, 18 ppts lower
Slide 23: Contents
Contents 1 2 3 4 Business Financial FY’24 & Medium Appendix Update Performance Term Outlook
Slide 24: Serving Our Customers with Exceptional Customer Experience
Strategic Achievements To Date Strategy to Unlock further Growth Multiple Catalysts to Deliver 2019 - 2023 Over the Medium Term Meaningful Returns A Larger More Active Customer Base; Deliver Meaningful Shareholder Returns Grow Balance Sheet & Organic Capital c. 1.3m +10% Growth since 2021 Over the M
Slide 25: FY'24 Outlook
Organic Capital Generation Returns Positive RoE1 Distribution Policy to be announced in H2’24 NIM2 c. 2.25% Income Total Income broadly in line YoY Mid single digit higher YoY Operating Expenses CIR% 3 c. 70% Cost of Risk c. 10bps Asset Quality Well provided for economic cycle 1. Return on Equity (R
Slide 26: Medium Term Guidance: Previous and Revised
Previous Guidance Revised Guidance (FY’25) (FY’26) Key Catalysts • Slow down in Deposit Market Net Interest Margin c. 2.50% c. 2.30% together with higher volumes of Term Deposits impacting previous NIM guidance Cost/ Income Ratio1 c. 55% c. 60% • Deposit Led Lender; Managed Cost of Funds remains dif
Slide 27: Contents
Contents 1 2 3 4 Business Financial FY’24 & Medium Appendix Update Performance Term Outlook
Slide 28: Business Overview (Dec'23)
98 Branches in Communities Across the Business Overview (Dec’23) Republic of Ireland €20.9bn €9.3bn €12.4bn Performing Loan Current Account Retail Deposit Book Balances Balances c. 24% 12.2% 11.4% Residential Current Account Retail Deposit Mortgages 1 Market Balances 2 Balances 2 Share Market Share
Slide 29: Company history and transformation
• ECB Stress Test Fail • ECB Funding Reduced • New Annual Mortgage Lending >€2bn • State Capitalisation (2012) • >€4bn NPLs Deleveraged • NPL Ratio reduced to 3.3% • €6.8bn Acquisition of Ulster Bank Assets • Agreed Restructuring Plan • NPL Ratio reduced to 7% • NatWest becomes a 17% Shareholder • N
Slide 30: Transformation FY'16 to FY'23 key metrics
166 19% 2.32% (244) 10% 1.48% FY'16 FY'23 FY'16 FY'23 FY'16 FY'23 Underlying Profit/ (Loss) Mortgage Market Share % Net Interest Margin % 28% 111% 1.4 93% 3% €nil FY'16 FY'23 FY'16 FY'23 FY'16 FY'23 Non-Performing Loans System Funding (€bn) Loan to Deposit Ratio %
Slide 31: Ulster Bank Transaction
Ulster Bank Performing Ulster Bank Performing non- micro-SME/ Business Ulster Bank Lombard 25 Branches tracker residential mortgage Direct loan book Asset Finance loan book business 330 Colleagues c. €6.1bn c. €165m transferred from Ulster Bank c. 67k customers c. 3k customers c. €500m c. 18k custom
Slide 32: Financial Summary FY'19 to FY'23
€m FY’23 FY’22 FY’21 FY’20 FY’19 Net Interest Income 620 362 313 341 356 Other Income 48 47 48 34 58 Total Income 668 409 361 375 414 Total Operating Expenses (Before Exceptional Items) (504) (395) (345) (323) (330) Operating Profit / (Loss) 164 14 16 52 84 Impairment (Charge) / Release 2 31 1 (155)
Slide 33: Average Balances, Yields and Interest Income
Average Balances (€bn) 1 Yields (%) Interest Income (€m) FY’23 FY’22 FY’23 FY’22 FY’23 FY’22 Tracker 3.6 5.4 5.1% 1.7% 180 91 Fixed and Variable 16.3 9.2 2.9% 3.1% 474 290 Consumer Finance 0.3 0.3 10.4% 9.4% 31 28 SME / CRE 0.8 0.3 5.1% 3.4% 38 10 Treasury Assets 6.0 8.4 2.0% 0.2% 117 16 Underlying
Slide 34: Average Balances, Cost of Funds and Interest Expense
Average Balances (€bn) 1 Cost of Funds (%) Interest Expense (€m) FY’23 FY’22 FY’23 FY’22 FY’23 FY’22 Current Accounts 9.3 7.9 0.0% 0.0% - - Retail Deposits 12.0 11.0 0.2% 0.0% 25 4 Corporate Deposits 1.1 1.2 1.6% 0.5% 18 6 Wholesale Funding 2.5 1.7 4.5% 1.4% 115 24 System Funding - 0.6 - 1.2% - 7 To
Slide 35: Cost Base Analysis
FY’23 FY’22 YoY YoY • BAU Operating Expenses increase YoY of 25%, in line with previous Cost Base Analysis €m €m €m % guidance Staff Costs1 213 164 50 +30% • Once-Off payment to staff, to help to alleviate inflationary pressure on staff (€3m) Other Costs 164 128 35 +27% Total Addressable Costs 377 2
Slide 36: Balance Sheet Summary and Key Metrics
€bn Dec’23 Dec’22 Dec’21 Dec’20 Dec’19 Total Loan Book (net) 21.5 19.6 14.2 14.2 15.6 Treasury Assets 5.3 5.3 6.7 5.9 3.6 Other Assets 1.0 1.0 1.3 0.8 1.1 Total Assets 27.8 25.9 22.2 20.9 20.3 Retail Deposits (Incl. Current Accounts) 21.7 20.6 17.7 16.3 15.0 Corporate & Institutional 1.3 1.1 1.3 1.7
Slide 37: Asset and Funding Composition Dec'23
Asset Composition Dec’23 Funding Composition Dec’23 €27.8bn €21.5bn 7% €23.0bn 93% 6% Total Assets Net Loans YoY Asset Customer LDR YoY Deposit Growth Deposits Growth Business Consumer Corporates, 5% Banking, 5% Finance, 1% Other Assets, 4% Cash, Term, 18% Current 7% Accounts, 41% Notice, 7% Debt Se
Slide 38: Loans and Advances to Customers at Amortised Cost
Loans and Advances to Customers Dec’23 Dec’22 Measured at Amortised Cost €m €m Residential mortgages: 19,557 18,340 Home Loans Buy To Let 749 824 Total Residential Mortgages 20,306 19,164 Commercial 437 239 Consumer Finance 499 401 Finance leases and hire purchase receivables 446 - Total Measured at
Slide 39: Stage 3 Analysis
Stage 3 Analysis Finance leases and hire Dec’23 Home Loan Buy-To-Let SME/ Commercial Consumer Finance Total purchase receivables €m €m €m €m €m €m NPL is < 90 Days 167 86 11 4 6 274 NPL is > 90 Days and < 1 year past due 77 51 2 4 4 138 NPL is 1-2 years past due 44 16 1 2 1 64 NPL is 2-5 years past
Slide 40: Capital Resources and Ratios
Dec’23 Dec’22 Transitional Fully Loaded Transitional Fully Loaded €m €m €m €m Risk Weighted Assets 11,546 11,546 10,627 10,627 Capital Resources: Common equity tier 1 1,647 1,616 1,718 1,616 Additional Tier 1 368 368 369 369 Tier 1 Capital 2,015 1,984 2,087 1,985 Tier 2 Capital 290 290 282 282 Total
Slide 41: Forward-looking statements
This document contains forward-looking statements with respect to certain of the Permanent TSB Group Holdings plc’s (the ‘Bank’) intentions, beliefs, current goals and expectations concerning, among other things, the Bank’s operational results, financial condition, performance, liquidity, prospects,
Slide 42: Thank You
Thank You End of Presentation
Permanent TSB Group Holdings — FY2023 Earnings Presentation on 6ix